In a first for the consumer goods industry, the tighter policy against deforestation will also apply to the multinational's business partners

By Michael Taylor

KUALA LUMPUR, Feb 25 (Thomson Reuters Foundation) - U.S. food and drink giant PepsiCo Inc said on Tuesday it would introduce stricter rules for the palm oil used in its goods - including a retrospective ban on working with firms linked to deforestation - and enforce them for its business partners.

In a first for the consumer goods industry, the tighter policies would apply to companies in joint ventures with PepsiCo like Indonesian food maker Indofood, forest experts said.

Palm oil is the world's most widely used edible oil, found in everything from margarine to breakfast cereals and soap.

But its production has faced scrutiny in recent years from green activists and consumers who have blamed it for forest loss, fires and worker exploitation.

Under PepsiCo's new policy, the major international buyer of palm oil has strengthened its commitments to protect, restore and monitor forests and peatlands.

It has pledged not to purchase palm oil from any direct or indirect supplier involved in deforestation over the last four years.

The multinational will also launch initiatives to stop human rights abuses among plantation workers on the ground.

A 2019 investigation by green group Rainforest Action Network (RAN) revealed palm oil from an illegal plantation in an Indonesian rainforest home to endangered orangutans had found its way into the supply chains of major brands including PepsiCo.

Besides nurturing biodiversity, forests are regarded as key to efforts to curb climate change as they store planet-warming carbon.

RAN, which has highlighted issues with palm oil sourcing by major snack food companies since 2013, was involved in shaping PepsiCo's new policy.

While other consumer goods firms have applied similar pledges to their palm oil suppliers, PepsiCo is the first major brand to extend the policy to its business partners and all other firms in its partners' groups, said Robin Averbeck, RAN's agribusiness campaign director.

This means any company that makes PepsiCo products using palm oil, as well as plantation firms in the same group -anywhere in the world - must also comply, she said.

PepsiCo's new policy positions it as a "front-runner in the industry", said Averbeck.

PepsiCo said in an emailed statement its goal was to ensure that "all our palm oil is free from deforestation, new development on peatlands, and exploitation of people".

"These updates to our policy and approach reflect our ongoing determination to have a positive impact through additional actions that contribute to a sustainable palm oil system by working with peers, suppliers, civil society and others," it added.

Indofood did not respond to requests for comment.

After becoming a target of high-profile campaigns against tropical forest loss, global household brands that buy and use palm oil agreed in 2010 to ensure their supplies did not contribute to deforestation within a decade.

But backers of the non-binding commitment, which include PepsiCo, have struggled to meet it, as it left implementation to individual companies and lacked a clear reporting process, said a consumer goods body grouping those firms.

Brands and major buyers have also been criticised by industry officials and environmental activists for not buying larger amounts of palm oil certified as green and ethical.

PepsiCo's stipulation that its palm oil suppliers and business partners should have no link to deforestation since the end of 2015 could be retrospectively checked through satellite monitoring, Averbeck said.

She urged PepsiCo to disclose publicly all grievances linked to its agricultural supply chain, adding that the roll-out of the new rules should be verified independently.

"If they are implemented and it brings other actors along with them, it could have an enormous impact on the industry," she told the Thomson Reuters Foundation.

(Reporting by Michael Taylor @MickSTaylor; Editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)